Thai shares plunged as much as 3.29% yesterday as investors around the world took flight after the US Federal Reserve's announcement that it could start winding down its quantitative easing (QE) programme later this year.
The baht also retreated to beyond the 31 to the dollar level.
The Bank of Thailand warned capital outflows from Thailand could continue following the Fed's increased optimism about US economic prospects. But it said this should not be a major concern because of the country's high level of foreign reserves at $176.5 billion as of June 7.
The SET Index tumbled to below the 1,400-psychological level at the opening bell before hitting a low of 1,390.33 and rebounding on bargain hunting to close at 1,402.19, down 2.47% for the day.
The Thai bond market also came under selling pressure from offshore players with net sales of 3.71 billion baht.
The Indonesian stock market was the worst performer in Southeast Asia yesterday with a 3.68% plunge, followed by the Philippines' which tumbled 2.86%.
Foreigners have unloaded Thai shares and bonds worth over 100 billion baht since May 23 when Fed Chairman Ben Bernanke said the Fed will consider paring QE once the US economy regains strength.